Khasgi Trust: HC direction for inquiry into allegation of misappropriation not warranted, says SC

New Delhi, Jul 21 (PTI)The Supreme Court Thursday said that the direction issued by the Madhya Pradesh High Court to the state's economic offence wing (EOW) to hold an inquiry into allegations of misappropriation against the trustees of Khasgi (Devi Ahilyabai Holkar Charities) Trust, Indore, was ''not warranted''.

The apex court, which held that the Khasgi (Devi Ahilyabai Holkar Charities) Trust is a public trust governed by the provisions of the Madhya Pradesh Public Trusts Act 1951, said that the 246 immovable properties are the properties of the said public trust.

A bench headed by Justice A M Khanwilkar delivered its verdict on the appeals arising out of the October 2020 judgement of a division bench of the high court.

The high court had directed the state of Madhya Pradesh to take all possible steps to preserve the cultural heritage including the Ghats, Temples, and Dharamshalas, which find a place in the Trust property, being the titleholder of the properties.

The bench, also comprising Justices A S Oka and C T Ravikumar, directed the trustees to get the Khasgi trust registered under the Public Trusts Act by making the necessary application within a month from today.

''We hold that the direction issued by the High Court to Economic Offences Wing of the State Government to hold an inquiry was not warranted,'' the bench said in its 71-page judgement.

''We direct the Registrar under the Public Trusts Act, having jurisdiction over Khasgi Trust, to call for the record of the Trust relating to all the alienations made by the Trustees,'' it said.

The top court said that after holding an inquiry as contemplated by section 23 of the Act, the Registrar, after giving an opportunity of being heard to all concerned, shall determine whether, by virtue of the alienations made by the trustees, any loss was caused to the public trust.

''If according to him any such loss was caused to the public trust, he shall decide and quantify the amount liable to be paid by the concerned trustees to the Khasgi Trust,'' it said.

''We hold that the properties described in part 'B' of the schedule to the trust deed, are properties of the said public trust. However, alienation of the said properties can be made only by taking recourse to section 14 of the Public Trusts Act,'' it said while holding that the supplementary trust deed of March 8, 1972, is valid.

The bench noted that on March 8, 1972, a supplementary deed of trust was executed by and between the trustees for incorporating a clause that the trustees have always had and shall have the power to alienate not only the income but any other item of the corpus of trust property for the necessity or the benefit to the objects of the trusts.

The bench dealt with broad questions which arose for its consideration in the matter, including whether the high court was justified in directing the investigation into the allegations of misappropriation against the trustees by the EOW of the state.

''There was no warrant to direct inquiry through the Economic Offences Wing of the state government as there is no finding that there was mens rea on the part of the trustees. No finding has been recorded by the high court based on material that the alienation made by the trustees has resulted in causing loss to the trust and that the entire sale consideration being diverted for personal use,'' it said.

The bench said the allegation of misappropriation can be gone into only by the authorities under the Public Trusts Act.

''Moreover, the direction issued by the high court proceeds on the erroneous assumption that the trustees have made misappropriation of the government properties. There is no offence registered against the trustees. Hence, Economic Offences Wing cannot be directed to hold an inquiry or investigation in connection with the subject matter of this proceeding,'' it said.

It said the registrar will have to initiate necessary proceedings under the Public Trusts Act and carry them to a logical conclusion.

The bench, which passed several directions, noted that controversy revolves around the properties claimed by the Khasgi Trust as the trust properties.

It said that subject to its directions, the judgement of the division bench as well as the verdict and orders passed in November 2013 by the single judge of the high court, are set aside.

In its verdict, the apex court noted the facts starting from October 30, 1948, when an instrument called ''The Covenant'' was executed by the erstwhile rulers of Gwalior, Indore, and certain other states in Central India for the formation of the United State of Gwalior, Indore, and Malwa (Madhya Bharat).

It noted that the late Yashwantrao Holkar, the Maharaja of Indore, was a party to the covenant who agreed to unite and integrate the territory of Indore into one state with a common executive, legislature, and judiciary, by the name of the United States of Gwalior, Indore, and Malwa (Madhya Bharat).

The properties are spread across several states, including Madhya Pradesh, Uttar Pradesh, and Uttarakhand. PTI ABA ABA RKS RKS